Now that the holidays are over, this is the time of year when many home owners start thinking about selling their home and making a move. But if you want to take full advantage of market activity you need to get started today!  While we do not have specific monthly information for showing activity nor for when homes go under contract, we do have monthly figures for closed sales. Using prior years closed sales data and making the assumption that the average closed sale is under contract for four to six weeks and buyers begin looking at least a month or so prior to writing a contract, we have come up with the following ‘Showing Activity’ graph:

Note how the activity picks up in February and runs through June before slowing down. Almost 50% of the year’s activity occurs during the four months from March to June and nearly two-thirds of the entire years activity occurs in the six-month period starting in February.

If you are thinking about selling your home, a good place to get started is to select a real estate professional to market your property. This person can provide you with a detailed market analysis and help you determine the right asking price for your home. This is a very important step because the wrong asking price can mean the home does not get sold, takes too long to sell or, on the other end of the scale, can cost you money by not getting the full fair market value for your property.

An experienced real estate agent can also help you in determining what repairs and improvements should be made to the property and give you tips on presenting and showing your home in the best possible condition.

The agent will also give you a marketing plan, which will include all of the ways they will promote the property to reach the broadest range of qualified buyers.

If you don’t have a favorite, qualified agent check with family, friends and business associates for references. Look for signs in your neighborhood, attend open houses, check the internet or call several local real estate agencies and ask for a ‘top producer’ or someone who is experienced in your neighborhood or price range. You should normally ask two or three agents to prepare a market analysis and marketing plan and during the presentation you will have an opportunity to interview them to determine their knowledge and qualifications. Ask for references and call them. You want to make sure that you end up with an agent who you have confidence in and also one with whom you are comfortable since you will be probably be spending several months together in the business of selling your home.

If you are planning to sell your home, this is also the time to begin preparing for your move. If you are going to purchase another home in the same area, the agent listing your home may be the best person to work with on another purchase. With the possibility of two transactions, you may be able to secure a better deal from one agent. If you are moving to another town or state, your listing agent may be able to assist you in locating an agent in the new area to assist you. The Internet can also be a valuable tool to find real estate agents and agencies in the new market plus a wealth of other information on the community, schools, recreation, weather and nearly everything else you want to know.

The next step is to implement the repairs and improvements that may be required prior to showing your home. At the very least this will probably involve a de-cluttering which could mean a garage sale, a few trips to the dump and renting a storage locker. Don’t forget the garage, basement, yard, shed and other storage areas. It may also mean some cosmetic improvements like painting, new carpet, perhaps a new light fixture, window coverings, tile, mirror or other decorating tips. There may also be some repairs to be done like checking the HVAC system, fixing that plumbing leak or electrical outlet, perhaps a roof inspection or fence repair.

These initial two steps of selecting a real estate professional to market your property and getting your property ready for the market can obviously take a few weeks. With increased showing activity starting in February and peaking in just 90 to 120 days NOW is the time to get started.

“Dave Pettigrew was selected to participate in an economic round table discussion hosted by the Northern Colorado Business Report. This article appeared in their January 12, 2012 publication”

http://www.ncbr.com/article/20120113/EDITION/120119934

The National Association of Realtors (NAR) track and report national home resales on a monthly basis and they have just announced a revision to the reported sales from 2007 through to the present. This has resulted in a 14.6% decrease in the sales over the last four years including a drop in 2010 sales from 4,908,000 existing homes to 4,190,000.

Naturally there are some observers who think the reporting was intentionally inflated but this is not the case and more importantly, it does not affect in any way the local sales figures that we report. On a national basis, NAR used the sales data reported by all of the multi-list services plus estimates of ‘for sale by owner’ sales to arrive at the total sales figure. In 2000 it was estimated that FSBOs accounted for 16% of the total market but the current estimate is just 9%.

As an example of the affect this has had on the total sales report let’s say that there were 100 total home sales in a community in a certain year and 80 of the homes were sold by Realtors and reported through the MLS while the other 20 were FSBOs. Then let’s assume that the next year the total home sales dropped to 90 with 76 of them were sold through the MLS and only 14 done as FSBOs. From the total market point of view there was a 10% drop in sales however from the MLS point of view there was just a 5% drop in sales.

A couple of other things that affected the sales calculation was that some MLS do not properly record new homes separately from resale homes so some new home sales have been reported as resale homes and with the expansion of the MLS system, some properties are listed on more than one MLS and there has been a double or even triple counting of a single home sale transaction.

It should be noted that revision and re-benchmarking are very common with economic data because nearly all measurements make assumptions. Perhaps the most important economic data figure is the GDP (gross domestic product) and this data undergoes frequent revision.

The local sales information that we report on a monthly basis comes directly from our multi-list service and we have never attempted to adjust the sales with estimates of the ‘for sale by owner’ activity. If for sale by owner activity has decreased by almost 50% over the last few years it obviously means that the total sales in this area have dropped by more than what we report through the MLS but without the benefit of an accurate source of FSBO data we simply report how many homes are sold through the MLS.

All data such as these sales figures together with the report of inventory (active listings), median and average sales prices, days on the market, pending sales, supply and demand and other information should be considered as market indicators and the month to month trend should help to make decisions about home buying and selling. Real estate is local and this local data and our local market are unaffected by national sales figures or even by what is happening in surrounding areas.

For more information on the national re-benchmarking of home sales, go to www.Realtor.org and the hot topics link to Existing Home Sales – Benchmarking. There is an interesting video interview with Lawrence Yun, Chief Economist of the National Association of Realtors along with a question and answer summary.

Recent headlines about the national housing market certainlyseem to be in conflict with one trumpeting “Good Signs for the RealEstate Market” and another “Home Prices Down in Most Cities”.Or how about “New Home Construction Bounces Back – Soars 9.3% in November” versus “Home Sales Remain Weak”.

And to add to the confusion, the National Association of Realtors (NAR) just revised their annual home sales report knocking down annual sales 14.3% from 2007 through 2010. The original report showed 4,908,000 existing home sales for 2010 and the revised figure is now 4,190,000. The good news is that the seasonally adjusted annual rate as of November 2011 is now at 4.42 million homes which is a 12.2% improvement over the 3.94 million pace in November 2010.

New single family home construction will probably total 440,000 for the year, the lowest level in the fifty years that records have been kept but home construction overall is up as apartment construction has doubled in the last year.

On the national level, the bottom line is that real estate sales are improving helped in no small part by record low mortgage interestrates. On the other side of the coin, prices continue to fall. According toNAR, the national median price for existing homes was $164,200 in November,down 3.5% from a year ago. The Case-Shiller 20-city index shows home prices fell in September and October and are now 32% below the index of five years ago. On a broader level, the FHFA Home Price Index dropped 0.2% in October and is down 2.8% for the 12 months ending in October. The index is 19.2% below the April 2007 peak.

On the local level (Fort Collins and northern Larimer County),2011 home sales are going to be within a whisker of the 2010 total halting a six year drop that began in 2005.  This has come about due to a very nice turn around in the last six months as home sales were down 13.3% at the end of June. More importantly pricing remains very stable with the average selling price in 2011 expected to be in the range of $250,000, a 1.5% increase from the previous year. Prices reached a peak of $253,406 in 2007 and after dropping 5.5% to $239,359 in 2009 have now recovered to within 1.5% of the 2007 level.

We had the opportunity this week to discuss the 2011 sales and get some insight into what to expect for the New Year with several leadersof the local real estate community: Chris McElroy, a Broker/Partner with The Group, Inc., a member of the Colorado Real Estate Commission and a Director of the National Association of Realtors; KenAnderson, a Broker with ReMax Alliance who is now in his second go around as President of the Fort Collins Board of Realtors and Gene Vaughn, Broker/Owner,ReMax Alliance.

All of us agreed that 2011 has been a good year for local real estate and we were particularly encouraged by the 11% increase in sales over the last six months and the momentum this should bring to sales in the NewYear.  Here is kind of a compendium of the comments:

·       Fort Collins is a great place to live and we will continue to see national interest and be an attractive destination for a wide range of people from many diversified areas of the country.

·       The stability of the real estate market with regard to the number homes sold, the inventory and the pricing are of comfort when compared to the wild gyrations of many other areas.

·       The economic engine that is Colorado State University and its continued growth, research funding and the added bonus of the excitement of the new direction in the athletics department.

·       Stable home prices and low mortgage interest rates compared to high rental rates and low vacancies provide incentive to first time home buyers as well as to investors.

·       Put another way, owning a home has never been more affordable and there are a multitude of benefits of ownership versus leasing.

·       The very real prospect of an improving economy, job growth and consumer confidence combine to give more people the opportunity town their own home.

·       With more first time home buyers it is time for the move up market to kick in bringing more buyers to the higher priced home market.

No one was prepared to go out on a limb with any solid prediction but the consensus is that we have weathered the‘recession’ very well and we can expect to see new growth in the housing market and relatively stable prices. To put a number on it, we expect to see a minimum of 3,000 homes sold in 2012 which will be somewhere around a 4% improvement and there does not seem to be anything to prevent home pricing from gaining another point or two and finishing above the 2007 peak.

So go ahead, file this away and we will expect to hear from you in twelve months! In the meantime, we would like to wish you a safe and Happy New Year.

Local real estate sales have been dropping for the past six years, from a peak of 4,100 in 2004 to 2,872 last year and half way through the current year sales were off 14.5%. Then the turn around began and from July to November we have seen sales show an increase each month compared to last year and are now at a minuscule 0.2% increase for the year to date. With one month to go, we are now on track to post a sales increase for the year, the first time in seven long years. It is not a slam dunk as we need to close 193 sales in the last month which is just about the same as we closed in November. Whatever happens, it sure won’t be a significant increase (or decrease) but hopefully it will at least halt the downward trend. Plus sales over the last five months have shown a 20% increase and this momentum carried forward puts us on track for a better 2012.

You can see from the expanded sales information table that the 16.4% increase in November was just enough to give us a big six home sale increase for the year to date. It is interesting to note that there was an increase in each of the four categories. Year to date figures show a small drop in sales of existing single family homes and a big increase in sales of existing multi family homes (townhome and condos).

Selling prices are holding pretty steady and the 3.4% drop in November was simply because we were up against an abnormally high average sales price for November last year. For the year to date, we have a very acceptable 1.6% increase including a 3% increase in the largest category of resale single family homes.

There are currently 1,196 active listings of which 262 are under contract so we are short of inventory. With a demand for about 250 homes per month for the next few months there is less than a four or five month supply when a balanced market is considered a six month supply. There is still a surplus of higher priced homes but in some of the lower price ranges and in some neighborhoods we are in a sellers market.

This is our last column until the end of the year so we would like to take this opportunity to thank you for your readership and for your comments, questions and suggestions. We also want to extend to everyone our very best wishes for a happy holiday season and a healthy and peaceful New Year.

The Fort Collins – Loveland Area Shows Well in National Home Price Data

Two closely followed home price analysis covering activity through the third quarter of 2011 were recently released; the Case Shiller Home Price Index and the Federal Housing Finance Agency (FHFA) House Price Index.

There are differences between the two indexes. The Case Shiller index uses only purchase price information from the 20 largest Metropolitan Statistical Areas (MSA) while the FHFA data includes purchase (purchase only) and refinance (all transaction) data from 287 MSA’s including all fifty states and the District of Columbia.

The Case Shiller index showed an annual price decline of 3.9% and the FHFA all price index showed a 4.3% drop over the four-quarter period ending in September 2011.  According to Case Shiller, the home price index has fallen to 2003 levels. The good news is that as of September 2011 the annual rate of change in 14 or the 20 MSA’s improved from August to September.

In the FHFA report, Colorado ranks highly in purchase only index placing sixth among all states with a small 0.24% price decline. This ranked second only to Wyoming for the best performance in the Mountain Region which ranked last in the country with a one year price drop of 6.8%. The FHFA uses the ‘All-Transaction Index’ for the MSA regions and the Fort Collins – Loveland MSA was in 58^th position with a drop of 1.4%.  This compares to the #35 ranking in the last report but gives us the best ranking in the state followed by Boulder -1.7%, Denver -2.8%, Greeley -2.9%, Colorado Springs -5.1%, Pueblo -6.2% and Grand Junction -11.0%.

In comparing this data to the average price and median price information we report from our local multi-list service (IRES), we find that it is pretty close. The Greeley / Weld County area shows a 0.5% drop in average selling price and an exact same 2.9% drop in the median price for the same period. Loveland and south Larimer County show a 2.5% drop in average selling price and a 2.0% decline in median price while Fort Collins and northern Larimer County are at a 1.8% increase in average price and exactly even in median price. Combining the two areas shows the average price up 0.3% and the median price down 0.8% which is pretty close to the FHFA figure of -1.4%.

The good news is that we are no where near the 2003 pricing level when the average selling price in the Fort Collins area was $224,488 compared to $248,435 right now. What caused housing prices to drop in back in a lot of areas of the country was the big run when prices more than doubled in a lot of markets and then crashed back to where they were in the beginning. Our market has been much more orderly showing a 10% increase over eight years with a top annual increase of 6% in 2005 and a drop of 5% in 2009. All the other years were within a 1% to 3% range. Slow and steady wins the race!

Pam & Dave Pettigrew, Certified Residential Specialists, are available to answer your questions on real estate. Write to them at Prudential Rocky Mountain REALTORS, 2700 S. College, Fort Collins, 80525, call them directly at 970-282-9305, email FCRealtor@msn.com or visit their award winning web site at www.FortCollinsRelocation.com for an archive of all their columns

October was another good month for local home sales with an increase of 13.7%. Coupled with an extra twelve sales picked up in the third quarter, we are now just twenty-nine homes behind last year. Considering that 2011 sales were down 14.5% or 235 homes at the end of June, the improvement over the last four months has been very welcome and we are now very close to achieving a year over year increase in sales, something that has not happened since 2004. In the sales table we separated the sales of new homes and resale homes and the drop is all in new construction which continues to decline from 25% of the market in 2004 to just 8.4% today.

The average selling price is holding up well and is now at $248,488 for the year to date, an increase of 1.9%. The inventory of homes for sale continues to drop with just 1,351 active listings at the end of October compared to 1,477 at the end of September and 1,592 last year. With 279 of these listings under contract, the net number of homes available for sale is 1,072. With a demand of 237 homes per month based on the last twelve months sales, the current supply is 4.5 months, well below a balanced market. This low number of homes for sale coupled with record low mortgage interest rates is obviously helping selling prices.

 The low interest rates and flat selling prices for home buying compared with the record low vacancies and higher rental rates mean home buying is an obvious alternative to renting in today’s market. Five years ago the average selling price was $248,796, almost exactly the same as it is today. The difference is the 30 year fixed rate mortgage which has dropped from 6.5% in 2006 to 4.0% today. With a $200,000 mortgage the monthly payment of principal and interest is $955 compared to $1,264 five years ago. Coupled with the tax advantages of owning versus renting and all the other benefits of home ownership; if you are renting shouldn’t you at least consider the purchase of a home?

* * * * *

 A brief snapshot of the Denver metro market shows that there were 3,183 closed home sales in October, up 12% compared to a year earlier but the year to date market is very similar to ours, posting a 0.1% increase. The median selling price for a single family home in October was $226,021, a 1.8% drop from last year. The number of active listings dropped sharply with 27.7% fewer homes on the market at the end of October compared to October last year and there is now a concern that this will hurt activity and closings over the next few months.

The National Association of Realtors (NAR) and the U.S Department of Housing and Urban Development (HUD) have released housing sales data to the end of September 2011.  New home sales were down 0.9% to a seasonally adjusted annual rate of 313,000 and existing home sales declined 3.0% to a seasonally adjusted annual rate of 4.91 million homes. This is a total annual sales rate of 5.22 million homes. This compares to the peak of the market in 2005 when existing home sales totaled 7.08 million and new homes totaled 1.28 million for a market of 8.36 million homes. From the peak just six years ago, new home sales are down 75% and resale homes are down 30%. The market share for new home construction has dropped from 15% in 2005 to just 6% currently.

Locally, we reviewed the sales data for Larimer and Weld counties. There were a total of 10,762 home sales in 2005 which was also the peak of our market. New home construction was 26.5% of the market at this time. Looking at annualized sales for 2011, we expect the total to be around 7,700 homes with just over 10% being new home construction. In this market, new home sales are down 72%, about the same as national sales and existing home sales are down 13%, much better than the 30% drop nationally.

Looking at the different local markets for new home sales and comparing 2005 to 2011 sales are down 70% in Fort Collins 75% in Loveland, 93% in Wellington, 50% in Windsor, 47% in Johnstown and 92% in Greeley.

Home construction is a very important part of the economy. The National Association of Home Builders estimate that the local impact of building 100 single family homes in a typical U. S. metropolitan area includes $16.0 million in income, $1.8 million in taxes and other revenue for local governments and 284 local jobs. The additional recurring impact for 100 single family homes include $3.2 million in local income, $648,000 in taxes and other revenue for local governments and 63 local jobs. These are ongoing, annual local impacts that result from new homes being occupied and the occupants paying taxes and otherwise participating in the local economy year after year.

With the drop in home building of over 2000 homes comparing 2005 to 2011, this is $320 million of income, $36 million in taxes and other revenue and 5,680 local jobs that have not materialized. If we take the six year period of 2000 to 2005 there were 18,584 new homes built in this market with a total sales value of $4.2 billion. In the six years since, the total are 7,500 new homes with a sales value of $2.2 billion so the drop is 11,000 homes over the six year period which means a total loss of $1.76 billion in income, $198 million in taxes plus the jobs that were not created. And this drop in activity not only affects jobs in the construction industry but also purchases of materials, supplies and equipment. There is also the ongoing impact from not having the occupants of these new homes adding to the local economy. And new homes are not just about growth, a lot of new homes replace old homes and bring energy saving efficiencies and other benefits to home owners.

Somehow, we have to get building again!

THERE IS NO BAD TIME TO SELL A HOME

While we are all enjoying the current warm sunny fall weather we are reminded that Thanksgiving is just six weeks away, followed by winter and the annual holiday shopping and partying season. Combined with the popularity of winter vacations, the lure of the ski slopes and the prospects of cold and snow, many home sellers think that the next few months are not a good time to be selling a home. In fact, there is no “bad” time to sell your home; the real estate market is active all year round. Naturally there are some peaks and valleys, but homes are bought and sold virtually every day of the year.

During the last twelve months, there have been 7,685 homes sold in this market area (Larimer and Weld Counties), or 640 per month. The peak activity is during the spring and early summer and in the six-month period from April through September closed sales average about 770 homes per month compared to the six-month October – March period when sales average 510 homes per month. By percentages, 31.3% of the homes sold in the second quarter; 28.7% in the third quarter and the other 40% of sales are closed in the six month period from October to March so the drop off is not nearly what most people think.

New construction also continues year round and sales models are open and active. In fact, the winter months are when most new home construction is placed under contract because the many buyers are looking for a summer completion for their move.

Naturally, presenting and marketing a home for sale during the winter months is different than during the summer. Evenings are cold and dark and scheduled showings can sometimes be affected by the weather but there are many things that you can do to make sure your home is presented in the best possible light. Since your landscaping will probably be brown and barren looking, displaying some photos showing your yard at the peak of perfection are helpful to prospective buyers. If you have a landscape design or list of plants and shrubs put this on display in the home book.

Keep sidewalks, porches, decks and driveways clean and ice-free. Your car tracks a lot of mess into the garage so try and keep the floor swept and clean. The holiday season offers a good opportunity to add some extra lighting and décor to the exterior and interior of your home and there is nothing wrong, after the holidays are over, with keeping a little extra lighting, like a string of lights in the front yard tree to add some sparkle.

Colorful plants and flowers inside can help to warm up the home and a cozy fireplace, candles and soft dinner music provide welcome relief from the outside. With darker days and evenings, add brighter lights, both inside and outside, and leave them on for showings. Don’t forget to provide extra mats at the entry for those dirty shoes and it is certainly ok asking buyers to remove them during showings.

The bottom line is that if you are serious about selling your home, there may be no better time than the present to put it on the market. A motivated seller certainly does not want to miss out on 40% of the year’s activity. Buyers at this time of year tend to be more earnest and there are usually fewer homes on the market, resulting in less competition. Make sure your home is easy to show and that it shows well. If it is properly priced and aggressively marketed, there should be a buyer for your home at any time of the year.

Pam & Dave Pettigrew, Certified Residential Specialists, are available to answer your questions on real estate. Write to them at Prudential Rocky Mountain REALTORS, 2700 S. College, Fort Collins, 80525, call them directly at 970-282-9305, email FCRealtor@msn.com or visit their award winning web site atwww.FortCollinsRelocation.com for an archive of all their columns.